Study On The Influence Of Loss Aversion On The Insurance Decision Of Large Growers In Shandong Province

Agriculture is vulnerable to natural and market risks and has a natural weakness.As an important tool to support agriculture,agricultural insurance has an important function of risk prevention.However,from a practical point of view,there is still a problem of insufficient actual insurance coverage of agricultural insurance for farmers in China.At present,agricultural insurance premium subsidies in China have exceeded 70% of the total premiums,and it is difficult to continue to increase the participation rate by means of high subsidies,which makes it more urgent to improve the enthusiasm of farmers to insure themselves.According to behavioral economics theory,individual decision-making behavior is influenced by loss aversion psychology.In practice,it is found that farmers’ loss aversion is generally high,which may affect their risk management behavior.Based on these,this paper analyzed the influence of loss aversion on the agricultural insurance coverage decision of large farmers in Shandong Province and discussed countermeasures to improve farmers’ insurance initiative.This paper firstly analyzed the relationship between loss aversion and agricultural insurance decision,and constructed a Probit model to empirically analyze the relationship between loss aversion and agricultural insurance decision.Then introduced the interaction term between loss aversion coefficient and the degree of yield reduction caused by agricultural natural risk,and constructed a moderating effect model to investigate the role played by agricultural natural risk in the above influence mechanism.Further,the interviewed large households were divided into two categories: large food crop growers and large cash crop growers,and dummy variables of crop cultivation types were introduced to construct a heterogeneity model to analyze the differences in the influence of loss aversion on insurance decision under different crops.Through the above theoretical derivation,questionnaire research and empirical analysis,this paper draws the following research conclusions:Firstly,the reference point for large growers to take out agricultural insurance is "having agricultural insurance coverage".Based on this reference point,large growers do not consider the premium expense as a loss.Secondly,with the reference point of having agricultural insurance coverage,the increase of loss aversion will significantly increase the probability of large growers to take out insurance,and each unit increase of loss aversion will increase the probability of taking out insurance by 12.28%.Thirdly,the increase in the degree of agricultural risk will significantly enhance the "pro-insured" effect of loss aversion,and for each unit increase in the degree of yield reduction caused by agricultural risk,the "pro-insured" strength will increase by 9.08%.Finally,although the average insurance rate of large food crop farmers is higher than that of large cash crop farmers,the impact of loss aversion on the insurance decision of large cash crop farmers is greater than that of food crop farmers.Based on the above findings,two research insights are obtained from this paper.Firstly,to reasonably arrange the time of agricultural insurance publicity and timely grasp the "golden time" when losses bring the strongest negative effect to farmers.Secondly,to take advantage of the strong loss aversion of cash crop growers to promote insurance,and to improve the insurance coverage rate of cash crops by increasing the coverage level of cash crop insurance varieties and exploring the insurance model of "policy agricultural insurance & commercial agricultural insurance".